Anthem’s Rocky Road With California’s Insurance Regulator Regarding the Insurance Company’s Defective Grievance System

The California Department of Managed Health Care (DMHC) is a government agency regulating managed health care plans in the state, including health maintenance organizations (HMOs) and most of the managed care plans servicing Medi-Cal recipients, such as Anthem Blue Cross, Health Net, Blue Shield Promise, Molina, and others. Every covered health plan is required by law to have a grievance process in place to investigate and resolve member complaints.

When the DMHC tells an insurance company that its “grievance system is defective, and has been for many years,” it’s probably high time for the company to change the way it approaches customer complaints. The DMHC told Anthem its grievance system was defective in 2017, citing violations as far back as 2012. Yet Anthem continues to this day to be cited and penalized for grievance system failures.

Read on to learn about how Anthem has been called on the carpet more than once for failing to adequately address grievances from policyholders. If you believe Anthem or another insurance company in California is unreasonably delaying or denying your claim or failing to treat you in good faith, contact Gianelli & Morris to review your situation with a skilled and experienced California insurance bad faith lawyer.

DMHC’s 2017 Accusation Against Anthem

On November 15, 2017, DMHC filed an action to assess administrative penalties against Blue Cross of California, dba Anthem Blue Cross, for violations of California insurance law arising out of its handling of enrollee complaints. The complaint succinctly summarized California requirements for insurance company grievance policies:

“Health plans are required to have and maintain a grievance system to ensure that standard enrollee complaints are adequately considered and resolved within 30 days, expedited complaints are adequately considered and resolved within three days, and to ensure the plan timely and thoroughly responds to Department communications and requests for information regarding consumer complaints.”

What DMHC found, in reviewing the complaint against Anthem, was that “Respondent’s grievance system is defective, and has been for many years.” The agency noted the effects of Anthem’s defective grievance system on policyholders, “creating frustration, stress, and even potentially detrimental effects on their health if appropriate care is delayed.”

The action against Anthem was based on many consumer complaints that eventually found their way to DMHC, but as DMHC noted, Anthem’s system was so defective that many consumers never had an opportunity to lodge complaints to begin with.

Grievance Failures Caused Real Harm to Real People

In its complaint, DMHC cited two specific examples of violations that had serious negative consequences for policyholders. In one “particularly egregious case,” Anthem denied a four-figure claim from a provider who performed a pre-authorized procedure because the provider initially submitted an incorrect date of service. It fell to the enrollee, who had a “very serious condition that required extensive surgical intervention and reconstruction,” to try and resolve the matter with Anthem. Despite a concerted effort by the enrollee, the enrollee’s spouse, the provider and the enrollee’s broker, 22 phone calls failed to resolve the issue but only resulted in “repeated transfers and unfilled promises that Plan representatives would call them back.” Finally, with help from DMHC, Anthem decided to pay the claim… six months after treatment.

The case against Anthem also detailed the illustrative situation of a man whose request for durable medical equipment was denied. Anthem did not respond to his grievance within the 30-day required time frame, and he had to make multiple calls to the Plan to get a response, but with no success. The grievance was finally resolved… 47 days past the 30-day deadline to resolve a grievance required by California law.

While DMHC only cited these two specific examples, it eventually found against Anthem on 11 separate causes for discipline. These causes included:

• Failure to Maintain a Grievance System to Ensure Adequate Consideration of a Grievance
• Misclassification of Standard Grievances as Exempt Grievances
• Failure to Timely Provide Written Acknowledgement of a Grievance with all Required Information
• Failure to Resolve a Grievance within 30 Days of Receipt
• Failure to Describe the Clinical Reasons for the Plan’s Medical Necessity Determination
• Failure to Provide Written Statement to Enrollee and Department on Disposition or Pending Status of an Urgent Matter within Three Days of Receipt of the Grievance
• Failure to Include Required Language in Appropriate Format on Grievance-Related Communications and Notices
• Failure to Timely Provide Information to the Department Regarding the Enrollee’s Grievance
• Failure to Expedite Plan Response Pursuant to the Department’s Instructions in an Early Review Case
• Repeated Failure to Act Promptly and Reasonably to Investigate and Resolve Grievances with Such Frequency That Indicates a General Business Practice
• Engaging in Any Conduct that Constitutes Fraud or Dishonest Dealing or Unfair Competition, as Defined by Section 17200 of the Business and Professions Code

The Hits Keep Coming

In the end, DMHC decided to assess $5 million in administrative penalties for the above deficiencies. This case covered 246 violations in 175 cases that occurred between December 2013 and August 2016, including individual as well as systemic violations. But that’s only half the story. Anthem had already been disciplined for a whopping 2,102 grievance system violations that occurred between January 2002 and August 2016 and paid nearly $6 million in administrative penalties for those errors. The total adds up to $11.66 million for grievance system violations between 2002 and 2016.

One might think that Anthem would have taken the steps to fix its grievance system by now, but the complaints have never stopped and continue to this day. A DMHC routine survey of Anthem’s grievance system in 2019 noted many deficiencies that were still uncorrected when it came back for a follow-up survey in 2022.

In just the first few months of this year, Anthem has been penalized nearly $150,000 for violations including failure to establish and maintain a grievance system for enrollees, failure to resolve grievances within the required 30 days, and failure to provide reasons for denying ER services.

Was Your Request for Treatment or Insurance Claim Unreasonably Delayed or Denied? Our California Insurance Lawyers Can Help!

At Gianelli & Morris, we take on insurance companies like Anthem every day when they have acted in bad faith toward their policyholders, denying claims without providing a valid reason, giving reasons that aren’t supported by the facts, or failing to follow California law. We can help you get the benefits you paid for along with additional compensation for any harm the insurer’s actions have caused you, including punitive damages to hold the insurance company fully accountable for bad faith insurance practices.

For help throughout California, call our Los Angeles office at 213-489-1600 for a free consultation to discuss your situation and find out how we can help. We have decades of experience fighting insurance companies representing California policyholders with an outstanding record of success, and we are ready to help you too.